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THE PRICE OF BIDEN’S NEW CHINA TARIFFS  
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Patrick Lawrence
May 23, 2024
Scheer Post
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_ Don’t look now, but Joe Biden has just adopted the Trump China
policy he has previously and relentlessly repudiated—and gone one
further. _

March 18, 2024, in the Oval Office. , Official White House Photo by
Adam Schultz

 

I love the photograph The New York Times ran atop Jim Tankersley’s
May 18
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analyzing the inadvisable raft of tariffs on Chinese imports President
Biden authorized four days earlier. There is the old coot signing the
paperwork at a desk in the Rose Garden as a crowd of seven looks on
admiringly. Polo shirts, sneakers, a baseball cap. Six of these seven
are people of color; four are women.

Perfect, just perfect. Study the picture. These dutiful onlookers are
not officeholders or administration officials. They are union leaders
from what were once powerful labor organizations: steelworkers,
autoworkers, machinists, communications workers, the AFL–CIO. These
seven represent, in short, the very people who will get hit hardest as
the executive order Biden just sent to Katherine Tai, his special
trade representative, takes effect.

That’s Joe, isn’t it? The Man from Scranton has made his career
gathering about him for the photo ops those toward whom he is
indifferent and, often enough, those he is about to screw without a
second thought (or even a first in Joe’s case).

Remember that famous occasion five years ago next month, when Biden
finished addressing the Poor People’s Campaign in Washington about
his plans to end poverty and then went to wealthy investors at the
Carlyle Hotel in Manhattan to say that, if elected, “Nothing would
fundamentally change”? If he has by and large kept his word these
past three years, something did change, something big, when, 10 days
ago, he ordered a very wide range of import taxes on Chinese-made
imports.

Will the U.S. make itself a manufacturing economy once again, bringing
lost industrial production back from the dead? This is the stated aim
of the new tariff regime, but no, what is done is done, in my view.
Will America, in consequence of higher costs that are now inevitable,
be a more expensive place to live for those to whom costs matter most?
Yes, this will change, over time probably by a lot.

Biden’s trade and national security people, and you can’t tell one
from the other these days, were preparing the ground for that Rose
Garden moment for many months. They left intact tariffs of 10 percent,
covering Chinese imports worth $300 billion, that Donald Trump imposed
in September 2019. But blocking exports in the other direction has
been the Biden regime’s preoccupation. Under cover of “national
security,” these include advanced semiconductors and other
high-technology products in the White House’s attempt—it will
never succeed—to subvert the Chinese economy in sectors wherein
American companies cannot compete.

Don’t look now, but Joe Biden has just adopted the Trump China
policy he has previously and relentlessly repudiated—and gone one
further.

The May 14 executive authorization is indeed a major escalation of the
Trump administration policy. Steel and aluminum, critical minerals
(including so-called rare earths), solar energy panels,
semiconductors, syringes and other medical equipment, those immense
ship-to-shore cranes you see at seaports: The list of Chinese-made
goods on which Biden will impose import levies is long, and the
numbers high. Duties on semiconductors double, to 50 percent. So do
levies on batteries and battery components, from 25 percent to 50
percent. Tariffs on electric vehicles, China having made itself a
global leader in EVs, go from 25 percent to 102.5 percent. This last
comes close to an outright ban on the sale of Chinese electric cars in
the U.S.

Some perspective here: The total value of the imports now to be taxed
is $18 billion. Last year U.S. merchandise imports from China were
worth $427 billion (as against exports to China of $148 billion),
according to Census Bureau figures. But in my read, Biden’s
executive order is the opening move in a protectionist regime that
will be extended significantly—especially in the near future, as
Biden competes with Donald Trump and the hawks on Capitol Hill to
prove his bona fides as a Sinophobe. In essence, Biden just changed
the direction of America’s transpacific economic policy. Chinese
retaliation is more or less certain, and then it will be bad to worse
for who knows how long.

Jim Tankersley, in that Times analytic piece noted above, was right to
call Biden’s just-announced tariffs a shift of historic magnitude.
“Mr. Biden’s decision on Tuesday to codify and escalate tariffs
imposed by Mr. Trump,” he wrote, “made clear that the United
States has closed out a decades-long era that embraced trade with
China and prized the gains of lower-cost products over the loss of
geographically concentrated manufacturing jobs.”

This passage needs a little decoding, and I will get to that in a
second.

With all those union chiefs around him, Biden went long, very long, on
how this sprawl of import taxes will be to the benefit of American
workers. That is not what this radical turn in policy is about, and I
wish those labor leaders understood this better than they appear to
have done. I wish they had thought better of standing behind a
president whose mind is on things far distant from the welfare of
their memberships. The Chinese will not pay these tariffs, as various
economists point out. Those union leaders’ dues-paying constituents
will.

What Biden just announced is primarily the strategy of a nation that
has hollowed out its industrial base—willingly, of its own
accord—as it tries to project geopolitical power against a nation
that has done just the opposite. Closely related to this is a
now-declared effort to protect the backsides and profits of American
corporations no longer capable of dominating the globalized economy
they so eagerly insisted upon but a couple of decades ago.

There are two other ways to look at this bold turn toward
nationalistic  protectionism.

One, the policy cliques in Washington and the corporations they serve
are nearly frantic as the consequences of decades’ worth of careless
economic policy, driven by greed and misapprehension, return to haunt
them. Keeping a competitor out by erecting walls made of import
tariffs, when viewed from this perspective, is the desperate choice of
people who simply cannot measure up to a moment that requires more
intellect, imagination and courage than they can summon.

Two, the working and middle classes in America were sacrificed to
those decades of corporate greed, as anyone paying attention at the
time could discern without difficulty. They will be sacrificed a
second time now, as Washington blunders on, this time in an effort to
bring back what it decided 40 years ago it was all right to give away.

■

The historic opening to China in the 1970s had engendered, by the
1990s, all sorts of unschooled expectations neither Kissinger nor
Nixon would ever have entertained. They were realists. Those who
managed China policy from, say, the Clinton years onward professed
motivations worthy of Victorian missionaries. They were at bottom
Wilsonians. Investing in China, they argued ad nauseam, will turn the
Chinese into liberal democrats in the Western mold. James Fallows, the
longtime Atlantic writer, called this during his time in Asia the
“just like us” line of reasoning.

It seems almost too naïve to believe anyone took this stuff
seriously, and maybe it was all along simply political cover for the
greedfest it was used to justify. By the mid–1990s, as the Clinton
administration was concluding the North American Free Trade Agreement,
American corporations were piling across the Pacific by the thousands
to invest in manufacturing platforms from which they exported goods
back to the U.S. In 2001 China gained membership in the World Trade
Organization. Its trade surpluses then grew precipitously, especially
but not only with the U.S., but this was O.K.: Everybody was winning.

Three other trends complete this brief pencil-sketch.

One, any thought that Western investment would transform the Chinese
into a nation of Westernized liberals—so devoid of any grasp of the
dynamics of different histories, cultures, traditions, political
systems, and identity altogether—was revealed as the daydream of
American-centric know-nothings. This dawning realization did not
arrive well among the Sinophobes, notably the descendants of the
“Who Lost China?” crowd on Capitol Hill.

Two, China proved an even more energetic climber up the development
ladder than Japan or any of the so-called “Asian Tigers.” The
speed with which it made itself competitive in ever more advanced
industries left American corporations and the untraveled policy
planners in Washington, fair to say, flabbergasted. It had to: It has
flabbergasted everyone.

Finally, in the decade after China joined the WTO, it became obvious,
and in time a touchy political question, that the migration of so much
U.S. manufacturing—south to Mexico via NAFTA, across the Pacific to
China—had destroyed a great deal of the nation’s industrial base
and countless of its communities while devastating the working and
middle classes. In more time it became obvious to the policy cliques
in Washington that they no longer had an industrial base sufficient to
their plans to salami-slice the U.S.–China relationship ever closer
to open conflict.

David Autor, an MIT economist called these recognitions, in a 2016
study
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“the China shock.” Happy talk gave way to bitter realities in that
first decade after China, with strong U.S. backing, joined the WTO.
Autor and his two co-authors calculate that the wholesale migration of
manufacturing to China had, by the time they wrote, destroyed a
million manufacturing jobs and two and a half times that many when
they counted jobs dependent on manufacturing. It is a mystery to me
why what American corporations and those in government serving them
have done in the service of sheer profit lust came as a shock to
anyone. 

I wonder if a certain judgment has not been made. Precise figures are
hard to come by, but in days gone by something more than a third of
Chinese-made exports to the U.S. were the output of U.S. and other
Western companies with mainland operations. Do the new Biden tariffs
arrive because the party is over for the multinationals as China
transforms itself into an advanced economy?

It is very strange to read about these events in corporate media, or
listen to the government officials these media quote as authorities.
The worst of these tellings  veer toward a version of the old
“yellow peril.” The Chinese stole all these jobs! The Chinese,
those untrustworthy inscrutables, tricked us into buying all these
low-priced products! It is not very flattering to mark down Americans
as so helpless as this. But those who shape opinion in the U.S. have
an old habit of casting America as the done-to, and those they do not
like as the unjust doers.

More prevalent are the omissions and elisions. Things happen with no
stated cause. Passive voice, long ago perfected at The New York Times,
is a common resort. We need not look further than the lead paragraphs
in Jim Tankersley’s May 18 analysis piece:

For the first two decades of the 21st century, many consumer products
on America’s store shelves got less expensive. A wave of imports
from China and other emerging economies helped push down the cost of
video games, T-shirts, dining tables, home appliances and more.

Those imports drove some American factories out of business, and they
cost more than a million workers their jobs.

Masterful. Consumer products, all by themselves, simply got cheaper:
They decided this on their own, you see. These wandering imports, not
American business people and policy planners, drove factories out of
business. A million people were put out of work. There was no human
hand in any of this, no one to fault, unless you want to blame the
Chinese. You will not read about any American chief executives in this
kind of piece, or the policy decisions of any American official on up
to the White House. It all simply happened.

Beware when The Times slips into the passive voice, readers: Subtly,
subliminally, very effectively, you are about to be misled.

It is a question of admission and responsibility. No one in a position
of power or influence wants to admit the grave, disloyal decisions
that have shaped the Sino–American relationship on the economic side
and no one has ever taken responsibility for the consequences, the
abuses meted out to working Americans. And so none of these
irresponsible people could learn from their costly mistakes. And so
they are now left to desperate attempts to repair the ship they are
responsible for steering into the rocks.

■

Taking the long view, when I consider the economic side of the
trans–Pacific relationship I sometimes go back to 1955. That autumn
my parents bought a brand-new Pontiac station wagon—gray and white
exterior, red and white seats—and how vividly I recall the drive
home from the showroom. The thing was built to go to the moon and
back. When my father gave it away to a friend in need, it was 11 years
later and the car was still going strong.

Somewhere along the line, I mean to say, American companies determined
not to compete any longer by producing superior manufactures but by
producing and selling cheap manufactures. It was about price, not
quality. I have never approved of this strategic shift. It demeans the
consumer, it serves as cover for stagnating wages, and it has a lot to
do with the wholesale migration of U.S. production facilities to
low-wage countries where cheap matters and quality doesn’t.

Edward Luttwak, the many-sided thinker often identified with
conservative causes, had an interesting point in this line some years
back. There is a hardware store in your town, and it sells hammers for
$14. They were made in a factory in, let’s say, Tennessee. A few
miles away there is a Wal–Mart that has huge bins of hammers, made
in China, that sell for $3. Which does it make sense to buy?

Luttwak answered this way. (The hammer is my example, not his.) The
Wal–Mart hammer is “cheaply expensive,” he would say: You get a
$3 hammer, but the hardware store doesn’t survive, and with enough
of these sorts of decisions your downtown doesn’t either. In time
things go to shabby. The $14 hammer, on the other hand, is
“expensively cheap:” You pay more, yes, but in return you also get
a town with a working commercial district, a Main Street to stroll,
and altogether a sturdier community. The good people of Tennessee are
better off, too.

I’m for expensively cheap. And Americans have been hooked,
effectively, on cheaply expensive since the rush to China gathered
momentum in the 1990s.

A question the Biden White House just put before us comes immediately
to mind. Is it possible to restore a manufacturing economy that has
been destroyed to the extent America’s has? Is this possible even in
the selected industries the new tariff regime will protect? Or is this
another mess on the way, another costly folly?

I am neither an economist nor an industrial planner, but,
seat-of-the-pants judgment, I doubt such a project is feasible under
our present circumstances—or maybe any circumstances. And I am
certainly skeptical that all these Biden officials purporting to
wisdom do not have it in them to manage an undertaking of this
magnitude. Straight off the top, any serious response to the crisis
the U.S. now faces must begin with a top-to-bottom rethink of
relations with China so that enduring solutions to problems that have
two sides can be achieved. There is of course no chance of this.

On the domestic side things seem equally inadequate. The Biden regime
proposes a plant here to produce high-end chips, another there to make
something else. A mile from such plants there is no contemplation of
change of any kind. I read now that a chip plant in the Southwest is
not getting built because there are not enough skilled workers to
build it. Think about that just briefly. Is this a promising start
along the highway to success?

A manufacturing base, as any good economic history will tell you,
arises out of a sort of unified, societal thrust involving culture,
social organization, shared identity, shared aspiration. It cannot be
declared in the Rose Garden and put immediately in place: It is
accreted over generations of development. It requires an educational
base that the U.S. has also done well ruining. It requires changed
social relations across the board, starting with a drastic, secular
rise in wages so that they are roughly in line with, say, northern
Europe’s. How good it would be if Americans could afford the
expensively cheap alternative—a wise choice they would be right to
make.

I’m not waiting for any of this out of the planners in Washington. I
don’t see that they are serious people. They are ideologues, and
ideologues are serious only about their ideology. I’m waiting for
something I would rather not wait for. I’m waiting for prices in the
U.S. to rise in the service of an endeavor that never comes good. It
will not be the first time ordinary Americans pay the price for
enormous failures in high places. It will be the second, if we count
from the “China shock” that should not have shocked anyone 20 or
so years ago.

PATRICK LAWRENCE, a correspondent abroad for many years, chiefly for
the _International Herald Tribune_, is a media critic, essayist,
author and lecturer. His new book, _Journalists and Their Shadows_, is
out now from Clarity Press
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His website is PATRICK LAWRENCE
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Support his work via HIS PATREON SITE
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* China
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* Joe Biden
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* trade wars
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